Solar Panels Roi: How To Calculate Solar Payback
The average American household pays a monthly electric bill of $118.36. When you go solar, the power generated by your solar panelsreplaces the electricity you buy from the utility company, reducing or completely eliminating that bill.
Though solar is a big purchase up front, that investment quickly pays for itself in energy savings over the life of ownership. The payback schedule is accelerated by state and federal tax incentives that reward people who invest in green energy.
A grid-tied system can pay for itself in around 3 to 6 years for DIY projects, and 5 to 9 years if you hire a contractor. Since solar panels are warrantied for 25 years, any energy you generate beyond the initial payback period represents a profit on your investment.
Wondering how to calculate your payback period and solar panel return on investment ? Lets do the math.
Make Sure You Are Thorough With Your Research
Before you start the solar farm, you need to carry out the research thoroughly. You need to:
- Be aware of the capital you need to invest in.
- Find out the cost per acre of solar panels,
- Solar farmland requirements,
- Other investors in solar power projects,
- Facts related to solar farm return on investment.
- Problems you might face and how to overcome them.
Remember, you need honest answers to all your questions before you can get started, so lets continue with the article, and hopefully, we will answer some of your questions.
We will also provide you with examples and different options to help you understand the concept better.
Leasing Solar In California
As you can see, the savings add up much more slowly with a leased solar panel system. But since you do not have to pay any money upfront, you can start to see an improvement in your finances right away. You do owe monthly lease payments, but your payments plus your new electricity bill are still smaller than your old bill.The important thing to remember is that you dont own the solar panels that means that you dont get rebates, tax credits, or payments for power generation above what you use. But you dont get any repair bills either. Your solar provider takes all the risk, then shares part of the return with you.
You May Like: Who Makes Sunrun Solar Panels
Is Solar Energy A Good Investment
The solar energy market is accelerating. According to the National Renewable Energy Laboratory, the industry will add 10 gigawatts of new solar capacity annually through 2022. That should increase to an average of 18 to 20 GW per year in the 2023-2030 timeframe. Powering that surge is a dramatic decline in costs. Amazingly, solar is on track to be the lowest-cost source of bulk power in the coming years.
Solar Power In California
California is a national leader when it comes to solar energy, generating nearly 33 percent of the countrys total solar power. This is three times more than Texas, the second-largest solar producing state. California began promoting solar energy in 1976, much earlier than many other states.
A huge factor that contributes to Californias high rate of solar energy generation is the number of homeowners who have invested in residential solar panels for their properties. Curious about solar panels in California? Keep reading to learn more about the cost of solar panels in California, solar rebates and incentives, and why so many California residents have turned to solar energy for their homes.
You May Like: Does Solid And Striped Run Small
You Will Need A New Roof Soon Or You Have A Metal Roof
If you are planning to get a new roof soon, then its perfect time to consider installing solar panels. In fact, it probably makes sense to coordinate the re-roofing work with the installation of solar arrays.
While most homes are covered with fiberglass composition shingles aka asphalt, there are some roofs that are covered with metal and/or a single-ply membrane like EPDM rubber, PVC or TPO membranes that are commonly installed on low-sloped roofs.
Investing In Solar Panels
One of the first steps to deciding whether or not to invest in solar panels is to determine if the product would work for your home’s location. States like California with more sunlight hours per day will generate more energy, increasing savings potential. The location of your home will also determine how much you save, based on the fluctuating prices of utilities by region. The higher the utility prices in your region the more impactful the savings from solar panels will be. Here are some factors to consider when deciding whether or not to invest in solar panels:
Aside from assessing the number of hours of sun exposure youll have by region, youll want to evaluate your home’s orientation towards the sun and factors like shade from trees. These factors can all affect the overall efficiency of solar panels.
Renewable Energy Certificates
Homeowners with solar panels that create more energy than used can sell it back to utility companies with net metering in the form of a Renewable Energy Certificate. These are issued when one megawatt-hour of renewable electricity is delivered to the grid and can either be sold or used as credit against future power usage.
Resale Value of Home
The more homeowners switching to solar from traditional energy sources will reduce the amount of carbon and other pollutants that get released into the atmosphere, translating into cleaner air and water.
Read Also: Where To Buy Md Solar Sciences
Shining A Light On Streamlined Solar Installs And Costs
Solar panels, inverters and equipment comprise only 25% of total costs. A significant chunk goes into soft costs, which is what the California mandate seeks to target and minimize by standardizing the process: marketing and sales , labor, installation, and permitting and other miscellaneous costs .
While the impact will take some time to become fully realized, a more efficient start-to-end process for a complete solar install is highly beneficial as solar matures from a new technology that requires an educational period for customers and installers alike, to a new standardwith the reduction in cost benefitting the end-user the most.
Yes Solar In California Is Totally Worth It
Is solar worth it in California? You be the judge! Solar energy offers a low carbon footprint, clean, reliable energy that can support your electricity even when the grid fails, and savings for any budget. Whether youre a homeowner or a tenant, solar is more than a distant dream. It could be your future!
Sunpro Solar offers professional solar panel installation services in Los Angeles, San Diego, San Bernardino, and the Murrieta-Temecula area. Contact Sunpro Solar today for a free solar energy consultation. Its time to save money and control consumption. Find out more about all the ways solar is the right choice for your home and get your estimate today!
Don’t Miss: Do Solar Panels Add To Home Value
Why Solar Power Is A Good Investment
While there are other ways of getting solar power to your home, adding your own solar panels to your own roof is an investment that not only pays off immediately by reducing your electricity bill, it also pays off in the future as the value of the system gets added to your homes overall value.
With many different financing options available, many Palmetto customers pay off their initial investment in less than 10 years. After that time, your home has a predictable, sustainable energy option that pays back your initial investment many times over.
If youre looking to purchase a home, youre likely comparing neighborhoods, outlining preferences, and taking steps to clarify your budget and long-term goals. It is an exciting chapter in your life AND the perfect time to embrace renewable energy! A solar energy system can quickly increase the return on your investment by adding value, savings, and convenience to your home.
Solar power is also a good investment in the future of our planet. An average-sized home solar power system helps eliminate three to four tons of carbon emissions each year, which is the equivalent of planting more than 100 trees.
As a source of clean energy, solar power doesnt produce greenhouse gasses and other harmful emissions that can be damaging to the environment, so your financial investment can also be an investment in the health and safety of future generations. Its a win-win for you and your family!
How Solar Panels Pay Back Their Investment Cost
There are two ways solar panels make money for the people who own them.
The first is through electricity bill savings. Electricity usage is measured in kilowatt-hours , and you need a certain amount of kWh to run your homes appliances and devices throughout the day. Choosing a solar system that meets your needs can virtually eliminate your electric bill .
The second way solar panels save money is through solar incentives. Tax credits and ongoing bonus payments for solar energy can lead to big financial gains if you live in the right state.
The right mix of utility bill savings and incentives can make an investment in solar far better than the returns you could see by investing in the stock market.
Don’t Miss: How To Build A Solo Stove
Increase The Value Of Your Home
Your home is a big investment, and one that you want to maintain and hopefully increase the value of. But before you start renovating bathrooms, updating kitchens, or re-siding exterior walls, consider this: solar-powered homes have been shown to earn more, sell faster, and attract more attention on the national real estate market.
As green homes become increasingly popular with buyers of all ages, your potential return on investment will continue to grow. So the question shouldn’t be, Is solar worth the investment? but rather, What kind of return can I expect?
Solar Farm Return On Investment
Investing in solar energy or farms involves a lot of money.
Solar farm investment should be done cautiously and after a lot of financial planning, since starting a solar farm will mean you have to the investment of a minimum of $1 million.
The good news is that the ROI is worth the investment as the recurring revenue will pay dividends for years.
Instead of just using the electricity for powering your air conditioner or refrigerator, the solar panels will be used for creating power to be sold to the electricity utility. Thus, the power you make can be used by someone else, as well.
When you have solar panels on the roof, you have a second electricity meter. On your farm, you will have your first meter, as usual, and you will buy electricity from the utility like before. The second meter will measure the power the panels make. You will get paid by the utility for the power that goes through this meter. So when you have solar panels, you are not just a consumer, but you are a producer as well.
Don’t Miss: Do Solar Panels Ruin Your Roof
Find The Land For Space
Solar farm companies need space to set up the panels. Thus, there is a requirement for land to get started.
Often a question arises related to the area required for a 1 MW solar power plant. At least 15 acres of land is necessary to start. Those who have the capital ready can purchase the land straightaway. If you do not wish to purchase, you might be able to lease the land. However, the leasing agreement should be for at least 50 years. This will ensure there will not be any need to dismantle the solar panels too soon.
You can also invest in a shared community solar farm where you can pay for a part of the land of the solar panel only.
Stagnating Or Declining Local Real Estate Values
While most homes have gone up in value by double digits during pandemic, there are likely to be some stagnating or declining real estate pockets developing within some of the local real estate markets such areas may not make a whole lot of financial sense to invest in because theyve either overshot the rest of the given local market or happen to have too many problems like high crime rates that may eventually force current residents to move out, leading to declining real estate values.
However, as the real estate markets are continually going up, those declining areas are currently few and very far between. But the market winds are subject to change, so always do your due diligence and consider the state of the local real estate market including the specific neighborhoods aka pockets within that market, especially if going solar is part of your property appreciation play.
Read Also: Can I Install Solar Panels On My Townhouse
Solar Ev Charging Station In California
If you already drive an EV or are planning to buy one, solar charging is a great idea in the Golden State.
If you charge your EV with grid power, your utility costs will of course increase and youll put more demand on the grid.
California recently launched an appeal for people not to charge their electric vehicles in peak hours because the power grid is under severe strain and the growth of EV use is accelerating.
It makes sense to use solar for charging, particularly as kWh prices are so high and there are still good incentives in place. It could also save rolling blackouts in the future.
How Much Do You Pay For Electricity
Your current electricity bill is the largest factor in determining how much youll save by installing solar. You pay your utility company for every kilowatt-hour of electricity you use, and your rate varies significantly depending on where you live. In some parts of the country, like the South, you can pay under 12 cents per kWh in others, like the Northeast, you could pay 20 cents or more. When you go solar, you reduce or eliminate your monthly electricity bill, so the amount you pay for electricity substantially impacts your savings.
If youre not sure where to start in determining your solar savings, try using our Solar Calculator. Our calculator incorporates local electricity rate data to provide you with a customized estimate of what you can expect to save, and just how quickly your investment will pay off.
Also Check: Is There An Income Limit For Solar Tax Credit
Are Solar Panels A Good Investment
Extreme weather like heat waves that can cause power plants to falter and storm surges that can knock out substations have left utility companies scrambling to keep up with soaring energy demands. However due to record droughts, devastating wildfires like the 2018 Camp Fire have been sparked by utility equipment in recent years. In a desperate attempt to avoid starting more fires, utility companies have begun intentionally shutting off power lines.
Additionally, California may face widespread blackouts this summer due to the sharply reduced water levels supplying the state’s hydroelectric dams. The first widespread blackouts in 2 decades resulted in 800,000 Californians without power last August for over 2 days due to a severe heat wave overwhelming the power grid.
The California utility company Pacific Gas and Electric warned that completing the work to revamp their power plants and transmission lines to cope with the rising danger of hotter weather could take over a decade. Given the unpredictable power outages, many homeowners may be wondering if it is worth investing in solar panels for a more reliable power source.
Homeowners Who Made The Solar Switch
Lisa and Jerry Chretien, a couple from Cape May County, New Jersey, decided to lease solar rooftop panels from Sunrun a year ago. High utility bills and the desire to live cleaner and greener lives inspired them to make the decision. Since going solar in June 2018, the Chretien’s electric bills have decreased, especially in the summertime.
“As soon as we would open the pool and turn on the air conditioners in May our electric bills would run close to $800, sometimes more,” said Lisa Chretien. “Saving money, especially with kids in college, has been a big help and a big saving. And there are a lot of incentives, tax wise you get a break. It has just been a plus all the way around.”
For Kerrie Lane, owner and operator of a cleaning service and resident of South Jersey, the experience was similar. After moving into her new home, she received her first electric bill: a staggering $1,100. Kerrie knew she needed to do something to make her electric bills affordable.
“I’m 60 years old, so I’m getting up there. I do a physical job for a living but I can’t do it forever. … So having my bills being manageable was very important to me,” Lane said. “My first electric bill in this house was $1,100. I knew I needed to correct this situation and make it manageable and Sunrun gave me the consistency that I was looking for. “
Also Check: How To Charge Solar Panel
Send Out Proposals To Individuals And Companies
While construction is being carried out, many individuals or companies may come with inquiries about the terms of service. Once the structure is totally erected, you can get in touch with individuals, companies, and industries about the services you offer. Also, it is important to include the payment method and service costs of using the power from your solar farm.